CA sues Prime Healthcare for balance billing insured patients

California regulators have filed suit to stop growing hospital chain Prime Healthcare Services from billing commercially-insured patients for fees that insurance companies don't pay. The practice, known as balance billing, is explicitly forbidden in some states, but California law is vague on this topic, according to observers. However, Prime's practices are so extreme in this regard that they must be stopped, according to the state's Department of Managed Health Care (DMHC). This follows an earlier initiative by California Gov. Arnold Schwarzenegger (R), who has asked the DMHC to work out rules that would forbid balance billing for all ED services. The DMHC issued draft regulations banning the practice earlier this year.

Prime, one of the fastest-growing hospital chains in California, has acquired a dozen southern California hospitals in recent years. Along the way, it has acquired a controversial reputation, as it often cancels the majority of private insurance contracts these hospitals had in place. Such cancellations allow the hospitals to bill insurers for out-of-network services, allowing Prime to charge higher fees.

Aware of Prime's strategy, and upset at what they see as inflated bills, some insurers have begun sending Prime only partial payments for members treated at its hospitals. Prime, in turn, has been billing patients for the remainder of its fees, sometimes to the tune of as much as $50,000, which has generated a firestorm of protest among patients, insurers and state officials.

In its lawsuit, the DMHC is asking the court to forbid Prime to bill insured patients for bills owed by insurers. This follows previous legal action by Kaiser Permanente, which obtained a temporary restraining order barring the chain from collecting from its members or reporting the bills to credit agencies until the case is resolved.

To learn more about the case:
- read this Los Angeles Times article

Related Articles:
Prime Healthcare picks up three Tenet facilities
California hospital operator boots HMOs
Upstart CA hospital chain buys another facility
CA law would ban balance billing for ED services